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Despite the acrimonious campaign, Nasheed conceded defeat and said he would not challenge the results of an election monitored by international observers.
"I graciously accept defeat," Nasheed told reporters on the main capital island of Male in a late night address.
"We lost by a very small margin. Democracy is a process. It is up to us to make it work.
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He added: "The MDP (Nasheed's Maldives Democratic Party) has always asked for a government elected by the people. Today is a happy day for the Maldives -- we now have an elected government.
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The election commission said that an inauguration ceremony would take place on Sunday and a special session of parliament had also been organised.
Nasheed's concession will be a relief to the